Article

Cisco service price list, potential for competition troubles VARs

Kevin Fogarty, News Director
Cisco Systems Inc. is rolling out a new remote monitoring service designed to give channel partners a lightweight managed service they can sell to small and medium-sized business (SMB) customers, without having to build the infrastructure themselves.

Cisco channel partners said they like the service, but worry it will create new competitors in the services business and that pricing for the service might put off some customers. [See pricing chart, below.]

The idea behind the new

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Cisco Smart Care Service is to give value-added resellers (VARs) another service to sell and to demonstrate to customers that Cisco is committed to supporting them, even through the channel, according to Karl Meulema, vice president of marketing and channels for Cisco Services.

Channel partners can install an appliance or software agent on a customer site to collect specific information about the Cisco devices on the network, including their health and performance. The data goes to a server hosted by Cisco, and then, according to a set schedule, to the partner.

Partners can be notified of problems as they develop, give customers snapshots of their networks, and let customers monitor performance through a Service Dashboard summary screen.

The service covers networks ranging from five devices to 105.

[Story continued after chart] Feature levels

 

 

               Cisco Smart Care Service: Preliminary price list

Number of  devices

Level 4:

Lower levels plus Call Manager, Unity, IPCC Express, MeetingPlace Express

Level 3: Lower levels plus CM Express and Unity Express

Level 2: Lower levels plus IPS and Anti-Virus

Level 1: Routing, switching & basic security

5-7

1250

1000

800

650

8-10

1750

1500

1250

1000

11-14

3000

2500

2000

1500

15-18

4500

4000

3000

2500

19-30

7000

6000

5000

4000

31-42

10,000

9000

7000

6000

43-57

15,000

13000

10,000

7500

58-72

25,000

20000

15,000

10,000

73-88

35,000

30000

25,000

20,000

89-105

50,000

40000

35,000

30,000

Source: Cisco Systems Inc.


Note:
  • Price represents total cost to the partner for customer's entire Cisco network;
  • The level for the entire network is determined by the highest single application or device discovered;
  • Some complex product series have an increased device count weighting;
  • Phones are covered, but are not counted in "number of devices."
  • Right now Cisco partners can use the relatively low-end SmartNet service from Cisco to support customers, or sell high-end managed services that either they or Cisco supply, Meulema said. Usually it's a managed service the partner itself developed.

    "While both of those are valuable, there is increasing noise from customers and partners that those kinds of services don't cut it," Meulema said. "Customers are looking for Cisco to have more skin in the game; but they don't want to lose the local support that a partner provides."

    Cisco's solution is what Meulema calls a collaborative service -- Cisco provides a series of tools and services to its partners, who can then resell them to customers in addition to their home-grown services.

    "This is a new network-level service, fully administered by the partner, but backed by Cisco," Meulema said. "You can't buy it or get it delivered from Cisco; only through a partner, and only through one of our collaborative services partners." Pricing and services are scaled in four major tiers, ranked according to the number of devices in the customers' network. Customers can increase the number of devices in the network without necessarily increasing the cost of support, as long as they stay within the same network size-range.

    There is no manufacturer's suggested pricing for Smart Care, Meulema said. Partners can sell it as is, or add their own services on top of it.

    The pricing to the partner is flat, however. "This is pure value selling," Meulema said. "Partner adds value on their own and sets the price for that value."

    Cisco has not yet released specific pricing, but SearchNetworkingChannel.com did obtain a copy of the preliminary price list. Because the service is still in development, prices or even the category structure may change by the time it's rolled out. But the list does give an idea of how Cisco will charge partners for the service.

    Meulema said in a presentation on the main stage at the Cisco Partner Summit that his goal was to simplify the price list enough to fit on a 3x5 card and, indeed, it does, though the printing is small.

    Doubts from partners

    Adding another service that partners can sell is a great idea, but pricing and reliability are likely to be problems, according to David Campos, CEO of Empire Computing and Consulting, a networking, security and VoIP provider in Daytona Beach, Fla.

    SmartNet, the technical support and product replacement service Cisco currently offers, often causes delays because serial numbers don't match with those at customer sites, lists of covered equipment don't match and other organizational glitches, Campos said.

    SmartCare could eliminate some of those headaches by automatically detecting all the Cisco equipment on a customers' net, but counting on flawless performance when the product launches would be a mistake, Campos warned.

    "Plus, I know just from experience that some customers want more flexibility. With this it's either all or nothing, and a lot of customers are going to want their core covered, but not some 3250 out somewhere else," Campos said. "And there's going to be some sticker shock for customers that go from 72 devices to 73 devices and you have to tell them it's going to cost them another $20,000 or whatever next year because they moved up into a different category."

    More on Cisco

    Cisco introduces new specialty and Certified program level for VARs that work with SMBs

    Cisco aims to reinvigorate service, networking business for VARs 

    Cisco rebates, tools promise higher channel revenues

    Just making the service available to VARs who don't have a managed services business could cause problems for other channel companies, as well, according to Jorg Kastrup, PhD., director of networking for the billion-dollar German service provider Computacenter AG & Co.

    "[Smart Service] might be something competitive from other companies, and it's not exactly clear what it is," Kastrup said. "We are wondering if it will actually compete with our own managed services offerings or not."

    Computacenter might resell the service, but there are good reasons no to, according to Kastrup's colleague Axel Peters, business unit manager for strategic sales -- networking for the company.

    "We have our own services that we sell, and don't yet see how this will fit in; we have to talk more about it," he said. "We don't want to get caught selling only Cisco stuff."

    But Smart Service is clearly different than anything hat could be classed as a managed service, according to Douglas Sabo, senior product manager, Data CPE, BSG marketing for Verizon in Tampa, Fla.

    "It lets you take a customers' temperature every morning, get a read on how their network works, but it's not real time, and you can't do everything you'd need to do for management," Sabo said. "I'm a service provider, so I'm biased toward real-time monitoring. This does have some advantages, but it's farther down the scale. I wouldn't call it management or even monitoring."

    The service is being tested now by a group of 40 partners, and Cisco plans to increase that number by another 40 within a few weeks and more than 100 by the end of the summer, according to sources briefed on the plan.

    It will be generally available within the U.S. sometime in the fall, Meulema said.

    Let us know what you think about this story; e-mail Kevin Fogarty, News Director


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